The wealthiest people in China are seeing their net worth decline as the global economic recession, the domestic crisis caused by the covid zero policy and the danger to the stability of supply chains continue. In Xi’s last speech at the 20th Congress, the Communist leader highlighted common prosperity as a goal to be achieved. However, the wealthy in China have long since begun fleeing to places friendlier to their fortunes.
According to South China Morning Post, concerns about leaving the country are rising. An event held at a hotel in Chengdu brought together hundreds of immigration consultants with Chinese millionaires who want to go abroad.
“My peers have said their firms have seen inquiries increase a few times over since May and they keep growing by the day” said Danny Cai, who runs an immigration and study abroad consulting firm in Zhejiang province.
“The clients are like frogs in warm water and suddenly they feel it boiling. We are realising that China is at a crossroads and new political and economic policies may bring enormous uncertainties and risks to their wealth.”
With the decline of the property market and the disastrous consequences of the zero covid policy, wealthy and high-income Chinese families are looking for a way out of the dilemma.
According to a survey by Hurun Report Research Institute, 32 percent of Chinese millionaires want to leave the country this year, more than twice as many as last year. Six percent had already started the procedures to leave for good.
The zero covid policy and the constant disruption of daily life are among the reasons. The wife of the co-founder of a private company in Guangdong province that manufactures products for overseas markets expressed that the “abnormal life” her children have to live under zero-covid is intolerable. He further said, “we are very worried because we don’t know how a socialist market economy in the new era will change society and impact what we own today and in the future.”
According to another immigration consultant in Chongqing, it remains to be seen if the private sector and rich will be targeted.
A London-based investment migration consultancy projected that 10,000 Chinese high-net-worth individuals would migrate this year, constituting 1 percent of the wealthy in the country.
Wealthy Chinese seek migration options in countries that offer special visas for investment, such as Portugal’s Golden Residence Permit, Grenada’s Citizenship by Investment program, Greece’s Golden Visa program, and Malta’s Citizenship by Naturalization for exceptional services for direct investment.
The procedures and permits to obtain a second citizenship can take a few months and cost from $25,000 to $1 million.
Chinese leader wants to tighten controls on the wealthy
After the 20th Congress, Xi Jinping remarked that the regime would be more attentive to the rich in China by saying in his speech, “We will keep income distribution and the means to accumulate wealth well regulated.” “We will protect legal income, adjust excessive income and prohibit illicit income,” reads the English-language report.
He also mentioned “common prosperity,” a phrase often repeated by the Chinese leader; however, this time, he added that they would intensify the means to control wealth accumulation, something he had not named before.
According to specialists in Chinese politics and economics, the regime’s goal is not to shore up the welfare of the population in the “European style” but refers to more state intervention to redistribute wealth. “This should be a warning sign for the rich,” warned Alicia Garcia Herrero, chief Asia-Pacific economist at Natixis.
A senior analyst at consulting firm Trivium China said that “any approach to wealth redistribution will proceed slowly and carefully given the significant economic hurdles China currently faces.”
“The tech and real estate crackdown has already spooked growth creators, and Beijing will not seek to exacerbate those problems by introducing overly stringent measures for the wealthy in the short term,” he added.
Along with the anti-corruption campaign launched by Xi, the communist regime also tightened supervision to combat the “blind expansion” of capital. To this end, it began rigorous investigations into private Internet companies and tough regulations on the real estate sector.
Some analysts point out that the Chinese government’s strategy could focus on real estate, as it is the Chinese people’s most significant store of wealth so property taxes could be increased.
They also point out that Xi’s position is much more fragile in a delicate economy and with the flight of rich people and their capital to other countries. The Chinese communist party needs the flow of money from taxes on the rich for its “common prosperity” plan; however, the crises it is facing now from the consequences of its own zero covid policies threaten its survival.
How much money and resources does it take to control all CCP members inside and outside China? Also, the CCP uses many resources to root out dissidents and repress the Chinese population. At the same time, externally, it requires more than just force to intimidate and buy governments and companies in other countries.
While leader Xi focuses on wealth redistribution, monopolies, and real estate, the country’s economic data is not very encouraging. The slump in international trade, U.S. sanctions, and the Russian-Ukrainian war are only part of the Chinese economy’s problems. With the global pandemic, natural disasters, food shortages, power outages, and the emergence of new epidemics in some regions, China is caught at a crossroads. So far, the CCP’s plans, according to reports from the 20th Congress, focus on the rich and big monopolies to rescue the country and “eradicate poverty” with redistribution of wealth to achieve “common prosperity.”